Chairman Miller Asks Senate to Put 401(k) Fee Disclosure Back into H.R. 4213, Empower Americans to Protect Their Retirement Savings
WASHINGTON, D.C. – U.S. Rep. George Miller (D-CA), chairman of the House Education and Labor Committee, today called on the U.S. Senate to add back 401(k) fee provisions stripped out of jobs legislation last week. To illustrate the issue, Miller had a pie delivered to each Senator sitting on the Finance Committee with nearly a third of the pie taken out representing the fees Wall Street takes from accountholders. According to a Department of Labor calculation, a one-percentage point difference in fees would reduce overall retirement income by 28 percent over a lifetime of saving.
“Every day, hardworking families make the difficult decision to set aside their earnings to provide for their retirement,” said Miller. “The Senate should side with middle class Americans who want to know the facts about fees and charges that threaten their retirement savings.”
Important 401(k) fee disclosure provisions were part of the American Jobs and Closing Tax Loopholes Act (H.R. 4213), legislation that the House of Representatives approved and sent to the Senate on May 28. Last week, Sen. Max Baucus proposed changes to the legislation that included the elimination of the requirement that 401(k)-type plans disclose all fees that participants pay.
“Americans should be outraged that there is no law that entitles them to know how much Wall Street takes out of their 401(k) account and what Wall Street does with that money,” said U.S. Rep. Rob Andrews (D-NJ), chairman of the Health, Employment Labor and Pensions Subcommittee. “When an American puts a dollar in their retirement account, they don’t expect to get 72 cents back after a lifetime of saving. They expect that dollar to be invested and grow.”
Miller and Andrews were joined at a press conference by: Karen Friedman, policy director of the Pension Rights Center; Cristina Martin-Firvida, director of economic issues at AARP; and Christian E. Weller a senior fellow at the Center for American Progress and associate professor of public policy at the University of Massachusetts Boston.
To watch a recording of the press conference, click here.
Below is the letter accompanying each pie:
Dear Senator:
There is currently no requirement that Wall Street tell accountholders how much they take out of Americans’ 401(k)-style accounts. With more than 50 million Americans relying on these plans to finance their retirements, hidden fees make a big difference in families’ retirement security.
The attached pie chart (which is delicious!) represents Americans’ 401(k) retirement savings. Yet, nearly a third of the pie is missing. This missing slice represents what Wall Street takes from many 401(k) accountholders in hidden and excessive fees.
A one-percentage point difference in fees over a lifetime of saving reduces some accounts by 28 percent, according to a Department of Labor calculation.
This is why the House of Representatives acted decisively in May to pass 401(k) fee disclosure protections as part of the American Jobs and Closing Tax Loopholes Act (H.R. 4213). However, last week, the Senate proposed to strike these vital protections from the bill at the expense of hard-working Americans.
These 401(k) fee disclosure provisions do not mandate the level of fees that 401(k) service providers may or may not charge. And, it does not add any cost to the bill. It simply requires disclosure of all fees plan participants and plan sponsors pay.
Americans 401(k) investments, which total approximately $3 trillion, belong to those who own the account, not Wall Street firms. At a time when the middle class has already lost too much of their retirement savings because of the financial scandals, they shouldn’t also be losing out because of unconscionable hidden fees.
I urge you to stop Wall Street from hiding 401(k) fees by restoring the House disclosure provisions. The 50 million Americans with a 401(k)-style plan deserve a fighting chance to keep more of their retirement pie.
Sincerely,
GEORGE MILLER
Chairman
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